Good Morning,
The ISO showed some surprise strength yesterday:
NP settled flat to SP, there was some price separation between APS and SP even though Palo temps rallied while Burbank didn’t; and BPAT to NP traded flat, more off of a derated AC than anything resembling Northwest bullishness. Northwest actually looks miserable, more destitute than normal, at least from our perspective. More on that dismal outlook in the hydro section.
Demand
Forecasts are generally warmer for next week than this.
Tale of two colors at the MidC; the blue circles reflect very cold weather, relative to the Day of Year, at Portland and Seattle. Highs in the mid 50s will drive loads up, folks will find their houses chilly when they wake up and will turn up their thermostats. The other tale, the red circle story, speaks towards a warming trend next week in the interior. All three stations (Spokane, Boise, Kalispell) are warmer than this week and slightly warmer than normal. This outlook will breath new life into the melt, rivers will rise, prices prob won’d do anything as BPA will spill more, or maybe not (see GCL in today’s Hydro section).
California returns to normal after a chilly week but even normal isn’t that warm, yet loads will rally from what we saw this week. We circled the 96 degrees in Sacramento as that is warm and suggests all of the NP interior has entered summer cooling season.
No Interior circles though we should point out the PV collapse next week, followed by a sharp reversal towards a slight positive anomaly. Choppy, but it’s May, what do you, expect?
Two hubs, NP and MidC, saw slight week-on-week upticks in their loads; SP and Palo are off with the latter down a lot.
Burbank and San Diego earned blue circles off their bitter cold realized temps while Phoenix saw a 10 degree day on day rally, that hot city is now in the low 90s but set to plummet back to the comfortable 70s next week. Montana is a freak show, its cities are warmer than Kalistan! Kalispell sported an 80 handle while all Burbank could muster was 71. Expect more of these Trump-esque type anomalies over the next four years, the world has turned upside down.
Hydro
The most interesting chart we saw this morning related to the biggest hydro facility in America – Grand Coulee. Check it out …
Discharge surged to 200k through the turbines, we haven’t seen that kind of production since last year. But equally interesting were the cuts in spill which is what drove the QG rally. Why? We don’t have an answer, maybe BPA was angry at one if its long clients and wanted to crush the market for a few hours? Let’s look closer at that generation:
The timing of the surge was singular – all during LL hours. Huh? Cut spill, jack gen during the off peak. Try to model that and you’ll go insane.
California remains dry, the bizarre weather patterns of WY17 are over, it is back to normal in the Golden State. Northwest isn’t dry, but not wet, just normal.
This is our morning view from Ansergy’s Puget Sound office, note the new snow in the Olympics. The higher elevation Cascades had builds yesterday, too.
This is our morning view from Ansergy’s RFC 10 day plot, note the big cuts in production from today. Totally out of sync with what happened at Coulee yesterday and earlier this morning. Each day has slight cuts from Monday’s STP which may suggest a slightly bullish forecast for Monday.
Sideflows are sideways except for the Lower Columbia which is materially down.
A different tale is told at the selected non COE projects. Flows on the Pend Oreille are approaching 70 kcfs which is adding to BPA’s angst. We’d expect to see most of these projects rally off of the warmer weather next week.
The regulated mainstem is notable for the big Spill rallies; the new water is just going over the spillgates.
Columbia River flows at the Border are soaring, some of that is from the Pend Oreille rally, the rest from the Kootenay and BC Columbia. We don’t see those inflows backing off anytime soon, the only respite will be a more aggressive refill, one that really has barely started:
Coulee only added two feet in a week, at some point BPA is going to grow serious about filling Roosevelt and we could see dramatic cuts in outflow. When that occurs is up for debate, the reservoir has 55′ to go, we’d expect ten feet a week soon. With the drum gate work done, that may start next week. Also take note of the two feet added to Lake Pend Oreille, all the while flows on its namesake river rallied.
The Pit River caught our eye, now discharging around 2500 cfs which is beneath hydraulic capacity. Who would have thought the Pit would be operating at less than HC in May in this water year? Not I.
TransGen
Flows on the AC are TTC-curtailed which makes the QG surge at GCL all the more interesting. The DC is nearly base-loaded 24/7 reflecting the length at MidC. Path 15 is nearly full reflecting the overall bearishness of the ISO. Powerex is aggressively swinging the NI reflecting their trading prowess.
Gas Noms are seeing a rally in Palo and a pull-back in the ISO while the Mid-C are sideways. MidC is keeping gas on the margin thanks to aggressive resource management on BPA’s part. It wouldn’t take but a 1000 MWs to crush the hub into single digits, which is why BPA decided to crush the LL last night. Look at the stack:
Market clears at $15.00 which suggests about 750 MW of gas on line; cut net demand by 250 aMW and we see prices in the $9 handle, cut another 500 aMW and you’re in low single digits. This is a very challenging time for forecasters because there is so much non-quantitative factors driving price. How much to spill and when? Back off wind or fill (or not fill) the reservoir. Just minor tweaks to any of the above and you can swing price $10 which is why we don’t see any compelling MidC trades in BOM. It’s random what will happen, we think, and prefer staying out of BOM when these other factors, factors that aren’t fundamental, determine price.
That surge in SP gas outages fizzled and now the hub is back to bearish normals while NP remains reasonably strong.
Conclusions
- May
- MidC – still don’t see a reason to take a position but when in doubt, make your book look like BPA and you’re probably ok. In other words, be long HL and punt on LL, that’s what the feds did
- Palo – our length paid off in spades:
- and we lack strong conviction given some Palo cooling next week and the inevitable return of the nuke
- Selling length, flat
- and we lack strong conviction given some Palo cooling next week and the inevitable return of the nuke
- NP-SP spread – we flattened that out but like the new incremental load in NP and find it insteresting to see the Pit running below HC
- Long the spread
- June
- We’ll hang on to the LL trade at MidC even though the market is up a bit.
- SP – we were long the roll, it behaved poorly, we’ll double down
- Palo – were naked long, we’ll pull on our boxers and go flat and take our $2.00 of gain